Weak truck demand saps Daimler's confidence for 2016

The firm's net profits grew by almost 13.0 percent between July and September compared with the same period in 2015, hitting 2.7 billion euros ($2.9 billion) on sales of 39 billion euros, up around 4.0 percent.AFP | October 21, 2016, 17:56 IST

FRANKFURT: German carmaker Daimler on Friday lowered forecasts for 2016 despite a strong third quarter, with lower truck sales countering growing demand for its flagship Mercedes-Benzcars.

The firm's net profits grew by almost 13.0 percent between July and September compared with the same period in 2015, hitting 2.7 billion euros ($2.9 billion) on sales of 39 billion euros, up around 4.0 percent.

Profits were slightly higher than analysts surveyed by Factset had predicted.

Growth at Daimler was powered by the cars division, whose Mercedes and Smart brands saw 12 percent growth in sales.

Chinese buyers were especially keen to get behind the wheel of a Mercedes, with unit sales increasing 20 percent there.

But the Stuttgart-based manufacturer said sales for the whole year would be "in the magnitude of the previous year," slightly less confident than its prediction of a "slight increase" when it released its second-quarter results in July.

"Weakening demand in the largest markets for trucks" was largely to blame for the fall in confidence, Daimler chief executive Dieter Zetschke told journalists in a Friday morning teleconference.

Trucks are an important division for the company, which holds the top spot worldwide in the sector with brands including Mercedes-Benz and Freightliner.

Daimler has delivered a performance "clearly above expectations" in the third quarter, analyst Michael Punzet at DZ Bank said, although "structural changes in the automotive industry" remain a concern.

Beyond the languishing trucks businesses, Daimler like other carmakers faces upheaval as pressure to develop electric vehicles increases and new challengers like California's Tesla step onto the scene.

CEO Zetschke has committed the company to introduce at least 10 electric vehicles in the coming years, and the car division's research and development spending has swollen in response.